Aligning Private Equity Firms with Leadership Teams for Optimal Company Growth
A few blogs ago, we covered the role of Alignment in Succession Planning. Alignment also plays a crucial role in the efforts of Private Equity (PE) firms, which frequently help company leadership teams achieve outstanding growth. Slater Success is often involved in advising clients who seek to maximize capital returns by using various types of M&A tools, including when PE funds are the optimal solution for growth.
The private equity industry comprises institutional investors, such as pension funds, and large private equity firms funded by accredited investors. The underlying reason for private equity investing is to achieve returns on investment that may not be achievable in the public market. PE firms raise and manage funds to yield favorable returns for shareholders, typically with an investment horizon of four to seven years.
A word about the mixed reputation PE firms can have in the marketplace:
“Critics argue that PE firms, unlike founders or industry specialists, lack a deep emotional investment or specialized expertise in the businesses they acquire. To boost profitability, these firms often carry out drastic cost-cutting measures: layoffs, reductions in w orker benefits, scaling back operations, and the like. Such strategies can profoundly affect employees and local communities. PE firms also frequently use leveraged buyouts, potentially burdening acquired companies with excessive debt and increasing the risk of future bankruptcies.”
-“Understanding Private equity” Investopedia, February 2024
However, we have had positive experiences working alongside fabulous companies in the private equity space that prioritize integrity, and heart and truly care about the leaders within the client organization. We have partnered with private equity firms brought in by client companies to align all parties, including their leadership teams. Our goal is to work together for the long-term success of everyone involved, following the strategic plan and growth path for the future.
If you're interested in learning more, please check out our “Her Success Story” podcast series featuring outstanding women leaders in the M&A and PE spaces. These interviews showcase brilliant women with integrity whom I greatly respect.
A couple of years ago, I worked with a client and its private equity firm to align the leadership team for the company's future growth. The CEO had so much heart and care for his people -- he asked me to come in and check to make sure everyone was aligned with the company’s future vision. Working together with dedication, we created a win-win for the partnership between the company and the PE firm. At the end of the day, everyone was overjoyed with the results.
Ultimately, PE firms have the ability and expertise to turn businesses into stronger ones by finding operational efficiencies and increasing earnings. This is truly compatible with the work Slater Success performs for our clients and we often find ways to work together with PE firms to deliver results against our common goals.
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